Morneau signals he’s not planning to back down on tax changes

Finance Minister Bill Morneau on Tuesday defended proposals to close income tax loopholes and “unfair” tax advantages his department unveiled earlier this summer – saying that while the government expected strong reaction to the proposals, he hasn’t heard any arguments that might make him back down or change the plan.

“What we’re hearing is arguments for the current system that we largely expected,” Morneau told reporters. “We are also, though, hearing some technical issues that have been brought up by people in different aspects of our proposals that we’re listening to carefully. We already expected that there would be specific issues that we might not have fully considered. That’s why we do a consultation.”

The Department of Finance consultation on the proposed reforms, which started in July, will conclude Oct. 2, 2017; after that, the government will release its final proposals.

The government has estimated it will recoup approximately $250 million as a result of the changes and will “create a level playing field” for taxpayers.

“We’re concerned that if we don’t move forward with some changes … that we could find ourselves down the road with two classes of Canadians: a class of Canadians that are able to incorporate and find themselves in a lower tax situation and a second class that aren’t able to incorporate and end up paying a higher rate of tax,” Morneau also said Tuesday.

On Tuesday, Morneau said the government is aware many professionals incorporate “for reasons that are really important to them.”

“We don’t want to do anything to discourage that,” Morneau insisted. “We are continuing that small business tax rate, so if a doctor or a lawyer or an accountant or an architect sets up a small business, they’re going to be able to use that advantage of a small business tax rate to re-invest in those businesses, which are legitimate businesses. We also know that the opportunities on a ongoing basis for them to save shouldn’t be significantly different from what other Canadians face.”

When asked by a reporter whether the Liberal government expected the level of backlash the tax code proposals have stoked, Morneau said he “fully expected that people would have solidly-held points of view on the measures we put forward.”

“We’re proposing to make some changes in the tax system that we think will level the playing field for the long term. People are concerned that it might change their situation,” he said. “There’s nothing here that was unexpected.”

Morneau’s meetings in Vancouver marked the first stop in a cross-country tour he and Minister of Small Business and Tourism Bardish Chagger have scheduled to consult with Canadians about their “tax fairness proposals.”

“I plan on hitting cities across Canada over the course of the coming weeks to hear from people (and) their views,” Morneau said. “The consultation process is ongoing. We want to make sure we get this right.”

“What Minister Morneau is proposing is not solving a tax avoidance problem… it’s solving a revenue shortfall problem,” Poilievre said. “Minister Morneau has spent the cover bare and he’s now looking to raise taxes on small businesses to pay for it. That’s why his own MPs are turning on him at their party caucus meeting this week. That’s why so many small business people – farmers, plumbers, electricians – are speaking out against these changes.”